How to Keep More of Your Money: Active vs. Passive & Real Estate Truths | Neil Jesani | EP 85

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Yo, yo, what is up, entrepreneur, DNA family? I am back with an incredible guest.

If you are a business owner or maybe you're an aspiring business owner and you aren't totally aware of all the tax write-offs and the advantages that you can have as a business owner, whether it be an LLC, S corporation, or otherwise, and you could use some help understanding how to keep more of that hard-earned money you have, this guest, Neil Josani, is going to talk about all the things that we can do.

What's up, brother? Thank you for having me, Justin. Yes.
It's always great to be here. It's great.
You and I are both newer to Miami, right? You moved six years ago, I think.

Six years back from New Jersey. Yeah, I moved during COVID.
So I was in Scots, Arizona, and I moved during COVID in 2021. So I've been here four years.
You've been here six. It's a great place.

Great tax advantages. Oh, absolutely.
No income tax. Absolutely.
Love it. That's great.
I think that

was one of the reasons on top of some other reason, but that was also one of the very attraction to move to Miami. Yeah.
So you run a financial firm, an accounting firm.

And so this is your wheelhouse. We are going to talk taxes.
We are going to talk financials. We're going to talk accounting.
Talk to me a little bit about your decision.

I know one of the reasons we just said, no income tax. That's big, right? So California, I was born and raised in California.
I don't know if they have the worst.

You might be able to tell me, but they have a terrible income tax law, right?

Florida is great. You know, we as entrepreneurs, we have no income tax if we build our LLC in S-Corp and pay ourselves.

Talk a little bit about your decision to move here and some of the tax advantages here for Flurians. So I think

number one reason was the tax because

you know once you reach at the certain stage in a life and where you know God has been kind and you are making lots of money, then you know that you want to do whatever you can.

So that actually one of the reasons was the saving money in tax and you know it is actually substantial. So that was number one.

Number two,

I'm fifty-five now and at the time.

You know, I was just under, you know, actually 50. I used to work in, you know, New York City,

reached to the office every day, 7.30 in the morning, never left before 7:30. But now I go to New York City, you know, my hands hurts, you know, my ear gets cold, and so on and so forth.

So I thought, you know, I'm at this days. It was great.
Northeast is wonderful when you're young and when you're a hustler. But once you pay your price, I thought it might be time to move to Florida.

And when I came in over here, I wanted to do actually summer winter. So I said, I'm going to, you know, you know, put 183 days.
I will become UNESCO Floridian.

So I don't need to pay to you know actually governor Murphy in New Jersey. Yeah.
But I came in over here and you know actually COVID strike and I was stuck over here.

I thought the summer would be hot, but it was okay.

And I this summer was pretty hot. This one got me.

No, it is, but but that I learned that the summer is a great time to go on the ocean.

You know, that you can jump in the water. It is a wonderful

actual temperature of the water. So I loved it and I never went back to New Jersey.
So that's a big one. Now, it's funny because me and my wife are just talking about this, right?

So before we moved here, we were in Scots, Arizona. She's from Florida.
And so I was like, oh, great. No income tax.
So I'll save 15% or so. Awesome.
But then I get my property tax bill and I'm like,

this is triple what I'd be paying in Arizona. And

health insurance is more. And I'm like, they're always going to get you.
Like, somewhere. There's never like this amazing thing that I somehow win, right?

Like that, ours one, New New Jersey, there's also that actually property tax is very high in actually.

Yeah. So, so, uh, so that for me, you know, that was not a big deal.

The only big thing I found is over here, you have to renew your, uh, uh, you know, that yes, you know, yes, that actually insurance is

insurance. I spend almost 10 grand a year in fire, flood, wind, and property insurance.
No, absolutely. It's insane.
Yeah, so it is, in fact, car insurance.

You know, actually, South Florida driving, it's crazy. I have no idea.
These people never give any signal.

Left, right, you know, I think there's nobody trained them, you know, that move or that give the signals. But anyway, yes, so that was the another thing I found is it is small, but in

you know, New Jersey, you can actually renew your car registration for four years or something like that one, only only 20 bucks here uh there are some 120 or you know 200 bucks and that every year you have to renew so obviously they are trying to make some money somewhere yeah but still honestly justin lifestyle is wonderful i would pay anything uh to solve yeah absolutely so um

i'm in real estate and i want to get into some of this tax stuff because I love real estate. I will always be in real estate.

A lot of people look at real estate as a great tax shelter, a a great tax advantage. Do we agree? Just the basic premise? It is.
I agree as well.

This is why I'll always buy apartments and storage facilities, any type of commercial that I can have the most tax write-off. However, I want to start this out a little more controversial.

I want people to understand, like, it's not as big and beautiful as a lot of people think, right?

I've gone round and ran in different investments and I own a big property in Houston. I own smaller properties in Alabama and I'm diversified.

Sometimes I have a really large tax write-off and other times I don't, right? Where I can't get the cost segregation study to get enough value out of it to give me the bigger tax write-off.

What are some misconceptions about tax write-offs, tax sheltering within the real estate that people maybe make big assumptions because they see some of the...

the, I don't know, clickbait type of social media about it. Oh, buy real estate, you get tax write-offs.
But what are some

missed assumptions that they're making that you can advise us on? So I think the biggest one, and this is really big, and nobody talks about it, it's called active and passive. This is big, okay?

So that most people don't understand. I have seen many clips online that said, hey, if you're making $200,000, you know, you are actually W-2 employee.

You can buy $200,000 worth of real estate and, you know, that pays zero in taxes. Not true.
So

not true. So I think that's where the biggest misconception and that it is unfortunately not actually people's fault.
There's so many misinformation out there.

So that actually, let's go one by one in detail. So what happens is real estate IRS puts in two categories: commercial and real estate.

Residential. Residential.
So IRS says your residential real estate will be worthless in a 27 and a half. So you can depreciate over the 27 and a half.
And your commercial would be 38 years.

Okay, fine. So now that actually technically, let's say you buy $1 million worth of condo, right? So that essentially you can write it off in 27 and a half.

Now, you and I both know that I have owned many real estate as well, that your...

carpet does not last for 27 and a half your faucet your so many things doesn't last for 27 and a half so essentially essentially, IRS allows you to do something called cost segregation study, which is actually an engineering study, and that allows you to accelerate the depreciation, basically.

So, generally, cost segregation study, when you do that, one is

the land value obviously do not depreciate. So, let's say there's a $1 million worth of condo, say, $2 million,

$200,000 is a land, so you're left with $800,000. And generally, you will get anywhere between 25% of that value that you can depreciate now.
So,

the 25% of the 800,000, which is another 200,000. So, meaning you would be able to depreciate $200,000 now.

And with the bonus depreciation back in the new bill, obviously, you can take the $200,000 as the depreciation. Now, let's go in detail about active and passive.

So, generally, this is the depreciation. It's a passive depreciation, meaning it will offset your passive income.
Now your W-2,

K-1s, all of that one, those are active income.

So you cannot offset your active income unless you convert your passive loss into active loss.

Or if you're a real estate professional, correct?

Right, exactly.

I get to take that whole $200,000 immediate tax write-off year one. Absolutely.
So

that is where I was going.

Either you are in a business of real estate, then that obviously you are in the business, or there's only two other ways you can convert your passive depreciation in active is one is REP, real estate professional status, right?

And the second one is you buy short-term, Airbnb, Loofol, as we say. There's only two ways.
Now it's more of a business, right? And so now you're in the business. Exactly.
Exactly. So that other,

how do you become REP or the real estate professional? So these these are two main rules you have to look for.

One is you need to give 750 hours a year managing your property or doing something with real estate.

And the second one, which is very important, that 750 hours needs to be higher than any other activities you can do.

So let's say if you're an engineer working for a larger corporation, generally people work for 2,000 hours. So obviously it's not going to work for you.

But if you're married and if you have your spouse, and if your spouse is not working, obviously you can make them the real estate professional.

Or you buy the short-term rental, which is less than seven days, you know, Airbnb type, and that's where you need to provide 100 hours. So anybody can do the 100 hours.
But there's a second condition:

as long as nobody else puts more than 100 hours, your 100 hours is higher than anybody else, then you're okay.

So that Airbnb type, it is easily doable, but that other the real estate professional, if you're working full-time, you cannot do that one. Second myth, which is also very, very important.

Certain time people say, hey, you know, that I'm making $2 million.

I will buy, you know, maybe $10 million worth of real estate and I will get the $2 million

in actual depreciation and I can wipe out my income zero. Not true again.
There's a 461L limit. It's called the business loss limit.

So if you're getting your income from a W-2 source, basically, then IRIS allows you to offset only $626,000 in a year 2025 if you're married. If you're single, then only half basically.

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That's the power of clarity.

That's JP Morgan Payments. Copyright 2025, JP Morgan Chase and Company, All Rights Reserve, JP Morgan Chase Bank, and a member, FDIC.
Deposits held in non-U.S. branches are not FDIC insured.

Non-deposit products are not FDIC insured. This is not a legal commitment for credit or services.
Availability varies. Eligibility determined by JPMorgan Chase.

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But you can still push that tax deduction forward. Next year,

you still have a million six or whatever, a million four

to be able to push next year. Next year, absolutely.
Now, what if you are an entrepreneur? Same idea. Entrepreneur makes $2 million, but not real estate entrepreneur.
Entrepreneur,

a day trader. That's fine.
Makes $2 million,

buys $10 million of the real estate. Are they able to

entire $2 million? Entire. Yes, right.
Because

when your income comes from a W-2, then and then 461L limit comes in upgraded.

So that actually we do have a client. We do have a client who makes $10 million, $20 million, and we find a depreciation, which is $10 million, $20 million.

And we can literally make their income zero. Obviously, you don't want to go less than 20%,

because that when you're selling it, you are going to recapture it. That's right.
So that actually you want to be careful because it's going to be

a long-term capital gain. So that you don't want to be zero now.
And when you're selling, you're paying the extra 20%. So you don't want want to go less than 20%.

But yes, the entrepreneur, you can do that. Well, that's a little bit of the trap of real estate, right? To your whole point.
If you win, so let's just say you take all 2 million today.

Like, great, no taxes, but then you sell year five.

Well, you may owe taxes. You may owe a million dollars in taxes now because you took 2 million, but you only got the, and now you're selling.
So now you're like, okay, now I got to roll this over.

Correct. So now you got to go buy more real estate.
It's like the golden handcuffs of real estate. It's like,

Now, also, if you don't sell it, then it's not a big deal. Who cares? Correct.
But unless you become wealthy.

What do you mean? Okay. So this is very interesting.
So whenever you hear people talk about real estate, primarily we talk about income tax. Okay.

And if you're not wealthy, only thing you need to worry about is income tax. Sure.
But once you get wealthy, now you need to worry about estate tax. You know, debt tax when you die.
That's right.

So that that

you would have heard people saying that, hey, you can hold the real estate until you die, right? You keep rolling it, right? And you can hold it until you die.

And when you die, you get something called stepped up in a basis. Yeah.
Right. So meaning you will get the fair market value.
So let's say you bought the real estate for 2 million.

When you die, the value is 30 million. Guess what? You don't need to worry about that one.
When you die, you will get something called stepped up in a basis.

By the way, both the party, Democrat and Republican, both were against the

stepped of tinnabasis, but still it is there. Okay.
So hopefully it's going to stay there. But that actually, both the parties are against.

But anyway, so that there, you know, when you die, you get the stepped up in a basis. So meaning the fair market value of that

your

beneficiary are getting, it is $30 million.

They can sell it next day for $30 million and they have to pay zero income tax. Sounds wonderful.
But now, guess what?

That for you you to get the benefit of the stepped up 10 basis, you need to own the real estate. So either you own, your spouse own, or your revocable living trust.

Not irrevocable trust, your revocable. So meaning when the real estate is owned by yourself or your revocable living trust, it will include in your state.

So when you die, your estate will become subject to the state tax. And if it is $30 million, it will be added to your state.
So if if I own it with an LLC, it won't count.

No, LLC, if you own the LLC, it will count yours. Okay, I will.
So the same, same, you're either a revocable trust or if I own an LLC,

single member.

Right, yeah. Single member.
Single member. Now, what are LLC?

LLC is owned by my S corporation. I own my S corporation.
It doesn't matter. It is still owned.
So the only way you can circumvent this one.

So that's why that once you're getting big in real estate, what people start doing it is they will start transferring or gifting it into irrevocable trust when you do it in irrevocable trust now it is out of your state basically so that then the irrevocable trust doesn't get the step-up basis bingo yes so that when you push it to the irrevocable trust you will not get the stuffed up in a basis so why would someone do that right because the that uh there the income tax a income tax rate is lower than a state tax state tax is 40 percent versus income tax is the 37% and the long term is half of that one.

So that's what it is. So that, and your growth, right? Because let's say if you push your real estate,

you bought for $2 million.

Value is now 10 million. Now you gift it to your irrevocable trust, basically, right?

And at your death, it's become 30 million, right?

So that the earlier that you are going to pay that actually estate tax on the 30 million minus whatever exemption you get, which is somewhere around $14, $15 million basically, versus over here, you pushed it at the $10 million valuation.

Now it is part of your irrevocable trust and still the value is still $30 million basically, but that you're not paying any

taxes.

Well, so for clarity purposes,

let's just say I was getting up in years.

And initially I have it in my irrevocable trust because I would pay less taxes in irrevocable.

And then I said, all right, I'm 69 years old.

I'm now going to take it from my irrevocable trust over my revocable trust because I may any day now kick the bucket. Would that be a smart move?

Because now it gets a step up and basis that doesn't have to be taxed by my kids?

It could be. And that other smarter way to do that one is how you take it out from your irrevocable trust is you can take as a loan from your irrevocable trust.

So you do take a loan, but at the time you are technically buying the real estate at the fair market value. So no, it would not be a smart move.

It would not work because, you know, at the time, fair market value of that real estate is probably 29 million. So

that doesn't either. Matt, to your whole point, you can go just get a bank loan tax-free, throw it in the bank.

They can sell it when they sell it. And now they're, they sell it for 30 million, but I got a $20 million loan.
So they're only getting taxed on it. Bingo.
Right. Yeah.

If you, if you do something like that one, that is fine. God, I love real estate.
This fires me. There's so many ways to do it and only an hour worth of telling it all.
And there's so much more.

So, by the way, make sure you are reaching out to Neil immediately. He's all over my Instagram, or this episode's going to be out soon.
Make sure you reach out to Neil to understand the stuff.

Let's get into something a little bit interesting because of what has happened with Trump. The big, beautiful bill passed.
That is great.

But you brought up something I want to know more about as a financial advisor in an accounting firm.

The right side and the left side in politics.

How are they viewing the economics today? How are they viewing financials today? You just told me

both sides do not like the step-up basis, right? Let's talk a little bit more about what they like and don't like because I look at myself as a Republican. I'm socially more of a Democrat.

in terms of what I believe in how I feel and how I treat people and just that whole side of it. Fiscally, I'm more of a Republican and I'm not cheap.

I like nice things and whatever, but I just look at money in a way more fiscally as a Republican. Talk about the differences right now as you see them given the seat that you sit in.
And

with all disclosure, my belief or my, you know, thinking is very similar.

Somebody said to me earlier on when I came into this country, he said, you are, you know, fiscally conservative, but socially liberal.

So I guess, you know, it is the same, same, same kind of category. Yeah.
I personally like it, what is happening currently.

Only thing I don't like is the debt, you know, current debt of the U.S.

You know, that is, you know, and that other, even most people talk about, you know, that actually $35 trillion and so on and so forth. But actually,

it is much more than that one. Of course, it is.

Because if that U.S. government were to be a public limited company, then according to the GAAP accounting standard, you also need to include all of your unfunded liabilities.

So if you factor in the unfunded liability of the Social Security and actually Medicare and so on and so forth, now you're talking about maybe $150 trillion.

And that other, if you look at 50% of American do not pay any taxes, okay? 50% American do not pay any taxes, only 50%.

50%. 50%.

Is that because they don't make enough to pay taxes?

They don't make enough money. So, yeah,

they don't make enough money. So they make like 38 grand a year or less or whatever it is.
Correct. And

that is what the another things we can talk about we need to somehow bring this segment of the population up, right? So basically, so you need to lift the bottom, right? We need to.

There's the one percenters, right? And we've worked our face off to get to where we're at and all that.

And I have my own opinions on people's work ethic, but simple things like teachers, police officers, fire, like the services, the people that are actually helping our community, it's crazy to me at times.

Like, I don't know the teacher national average of salaries across the nation. I have no idea.
I can tell you what is drastically too small. Absolutely.
Why, I would guess 4X.

I would 4X all their income.

And that I personally, because I have seen the other part of the world, so many people and that other, you know, if I may digress for a second, most American, you know, and my kids are, you know, actually born over here, most American, when I say they don't appreciate this country.

This is, this is, this is a wonderful country. I'm telling you, I have probably seen one-third of the globe.
You know, I travel and, you know, I take my children.

And Americans are the hardest working people.

You know, majority. Americans are the hardest.
Right. American ocean.
Yeah, right. I would have thought that.
Oh, compared to Europe, even Asia, you know, that are the Americans are hardest working.

In fact, there is actually a study has been done. Most Americans do not take all of their PTO paid time off.
That is actually employer provides. American do not take, okay.

Now, that other, I think the

area of improvement is somehow nobody has said to this segment to save money. You know, I think that is where I see

right now. They lose debt and they blow through it and they're paycheck to paycheck.
Absolutely. They make 300 grand a year, but they're like, every month, they're like, oh my God.
Absolutely.

I think the lifestyle is the biggest rag. And that obviously inflation we've seen, you know, actually rent, you know, real estate, you know, it actually went quite a bit up.

So I think that's where you will see, but somehow you can still save some money. You don't need to save.
You know, there's actually a great story, if I may tell you over here.

So that actually, when I started my first company,

you know, that other one Friday I was living, Friday, I leave office somewhere on five o'clock, and I'm getting call,

you know, from that other, you know, some business.

Long story short, one of my employees, we used to do the payroll on Friday, and that at that time we used to, you know, give a check, actually, yeah, it's a physical check, right?

Right, you know, back in the day. So that woman went for the

check caching service. And, you know, that person called me to actually verify that she's your employees and she's working and so on and so forth.

So, you know, I did confirm and then I talked to this person on a Monday.

And I said, you know what,

I'm in a really good mood. I'm planning to give you some race today.
And she said, oh, Neil, that would be great. So I said, you know what?

I'm going to start making payroll on Thursday rather than on Friday. So that

from that point onward, we start doing payroll on Thursday before lunchtime. So this employee can go out.

on Thursday at the lunchtime, they can deposit their check in a bank and they can save whatever 5%, six percent they were paying to the check, you know, actually check cash company. Yeah.

So, and then I said to her that you can't wait for a day. Something is wrong over here, right?

You know, that actually whatever $800, $900 check you got, you can't wait for a day and you pay somebody to get that money right away. Right.
It means that we haven't.

So I said that let's, you know, actually from this point onwards, start saving, you know, it might be 30 bucks, it might be 40 bucks, it might be 50 bucks, but let's start putting that one in the side.

Yeah. And that after, you know, six months, year, you will start seeing maybe $5,000 in your checking account and you're going to feel great.
So that actually coming back over here,

somehow the only thing, you know, the

big, beautiful bill worries me is the debt situation. It is that somehow that it is going to add unless

we grow the GDP and that so far it looks like that we will be. That's where you know Scott Besson is saying that 333, right? Basically, so as long as we grow the GDP, we grow the economy.

And so far, honestly,

when that actually Trump declared the tariff, you know, I went to my analyst in my office and I said, you know what? I'm feeling way more bullish in America now. You know, that other How do you feel?

So you just said how you feel about tariffs, but like it's really hitting America pretty hard. Oh,

and how long do you think it will hit? Like he's like, this is the ripping the band-aid off, in my opinion. I'm not political and I'm not an economist and I'm not a financial advisor.

I just know some things. And I interviewed some really smart people.
Sure.

I feel like what he is doing with the tariffs is saying it is either death by a million pay-per-cuts.

Or sever the arm.

Choose. You get to die by a million paper cuts or you cut your arm off and you live forever.
And he's saying, I'm going to cut the arm off. Like, we are going to make this an issue.

It's going to hurt a lot, but then we will rebound. Do you, is that?

No, that actually, I agree with Teref, in fact.

You know, that I'll give you a quick example. This is another story I think you're going to love.
So I went to India in January of this year, 2025.

You know, I went for a few days.

You know, my nephew owns the

store for you know extra glasses so i wear reading glasses and that he said uncle i can make something called you know actually progressive for you i had no idea anyway uh i bought three pairs of the glasses uh you know from him he's you know he said it will take two weeks i will ship it to uh you know actually us so i that came back it was fine uh i bought it for some five six hundred dollar or something like that one you know actually us dollar yeah um anyway so that actually he shipped uh the three glasses it came in over here uh all good.

It is somewhere came in, you know, March or something like that one, February, March. Anyway, I tried and I did not like it because, you know, actually, progressive is not that easy to get used to.

Not at all.

These are progressive. Oh, is it? It's hard.
So under here, I can read, and then over here, I can write

it starts to give you a headache a little bit. Right, yeah, you know, somehow.
So, you know, my nephew said, Uncle, I would like to fix it. You know, these are very expensive glasses for you.

Why don't you ship it back? And I said, no, don't worry. He said, no, no, no, ship it back.
So, you know, actually, my wife goes and you know, she ships it to

India.

So I that asked her, how much was that fun? She said, no, it was some, you know, actually 50, 60 bucks to ship to India. Fine.

Now the story begins.

After a few days, she said, oh, somehow FedEx charged me some 360 bucks. I said, 360 bucks to ship to India?

So that the C call FedEx. Guess what? India charge $300

tariff

on a glasses, which I bought it from India,

sending it back to repair it.

They charge $300 tariff on it. Because it was entering the country.
Entering the company.

So that if you look at that one, I mean, somehow people across the globe, they have used and abused America.

So I think up to some extent that we need to level the planefull.

That's been said that you also need to be mindful. Even with no tariff and so on and so forth, we are still number one country on the earth and we become number one.

So that whatever we have done up to some extent, it is right. Whatever something broken, that's what we have to fix.
And I think that is where that is tariff, that

tariff might help up to some extent over there. That's been said, I guess, you know, knowing actually President Trump,

he's a very smart guy. He's actually a businessman.

I particularly believe even though he shows that one he has has the ego, but he has no ego, he can walk back, he can be very flexible, he can be very nimble.

So the appropriate opportunity comes, he will make a deal with people and make it work. So

I'm personally very, very upbeat,

very bullish in America at the moment. I mean, that's great.

I'm interested to see on all the different things that he's doing, right? I think between

immigration and tariffs. And,

you know, listen, I'm even in construction, like the cost of things is insane, insane right now, right?

And so something has to be done because it's not COVID anymore. The ships aren't lost at sea with all the products.
Like everything's landed. We shouldn't have material costs the way we are.

It doesn't make any sense. It's hurting everybody.
Everyone, even people who do financially well, you're like, why does this cost this much?

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I think up to some extent, I personally believe that some of the upper middle class class business owners took the advantage of the COVID. Of course.

So, meaning they got the opportunity to raise the price of a menu, they got the opportunity to raise the price of their plumbing services, electric services, everybody raised the price, even though there was no need.

And then COVID, you know, actually, COVID is gone, but still, they haven't lowered the price. So, I think some people, so if you look at that one, you know, I'm in a business of money, right?

I mean, that the only time I'm talking to somebody when they have a tax problem i mean we deal with people who make more than two million dollars right i see money there's lots of money out there there's so many people makes lots of money so i think that uh if you look at uh you know there's always some winners and losers right so that one but obviously losers don't need us only only the winners need us right basically so i see that i can see that there's so many even the normal businesses which you can't imagine they are making tremendous amount of money.

So I personally believe that these people did very, very well, but it's UNESCO bottom 50% is probably paying the UNEX price.

Yeah, I mean, listen, yesterday I went to go get a, or it was Sunday, I went to go get just like a breakfast burrito. It was $21

for eggs, beans, rice, bacon. Like, it's a breakfast burrito.
It's $21.

I get, anyways.

So given where you sit and knowing the amount of people that make money,

and it could be real estate, what would be your number one tax write-off suggestion? And I don't care the vertical, whether they day trade or

they do hair for a living. They do really well.
Sure. Where would you typically suggest?

What's your number one suggestion for tax write-offs? Sure. Is it real? And maybe it is, maybe it isn't.
No,

so that number one is actually depreciation-based strategy, basically. So

it could be real estate. You could use actually believe or not and that we do quite a bit.
You can use the equipment. Oh yeah.

And that's huge. Right.
That one is huge. And why equipment? Because that, let's take the same example of the $1 million condo.

If you buy $1 million condo, that you get $200,000 writes off. Right.
Right. With the cost segregation study.
If you buy $1 million worth of equipment, you can write off 100%.

So equipments are way more efficient than real estate in terms of tax side.

I'm not talking about investment, obviously. But if people make money in oil and you buy a new oil rig, it's 100% tax right.

Correct. So that are the equipment.
So we do

quite a bit, you know, equipment deal, basically. So that's where, so that it is very similar, like a managed services, basically.

So somebody wants to buy the equipment, you know, big equipment, and you know, you just create your LLC, you buy inside your LLC, they will manage it and they will pay you some, you know, that actual return on investment and you will get entire tax rights off.

So that actually, that would be one strategy. What would be a good piece of equipment? Because now people are probably thinking, oh, I got to go buy equipment.
What would you suggest?

So that there's somehow we like actually heavy construction equipment. Those are very, very good.
That one truly holds the value. Yeah.
You know, those kind of things.

So I think that is one we like it quite a bit and what we do even in that one is that actually some of the companies we deal with they use the same irs code of airbnb lufo right short-term rental basically and so rent it for less than seven days you can become active as long as you give 100 hours and now you can offset your so i could go in and buy a bulldozer bingo and start short-term renting it out to construction companies.

I get 100% tax write-off for whatever they cost in whatever income that I'm producing. And maybe I don't even want to produce income, but I just don't want to have to sell it.

Because if I do sell it just like real estate, then I have to go

recapture the tax write-off I got. Correct.
And the good thing is about equipment is after five, six years, value of equipment is 50%.

So even though you recapture, you are recapturing only 50% value. After five years.
After five, six years. Yeah.
So that's actually, yeah, you know, so that one is actually wonderful.

That's been said, real estate has always, it's a value because that other,

I think,

you know, that people talk much more about taxes, about the real estate, but I think real estate has much more value in terms of investment

as well. So I personally believe, and that I have invested quite, you know,

maybe for the last 15, 16 years in the real estate. And my primary logic is, is it makes sense from investment perspective? That's right.
You know, tax is the additional benefit.

Yes, I do factor in, but it's the investment. Does it make sense from the investment perspective? And that once it makes investment perspective, then you factor in the tax.

So I think a real estate has a much more other value that we are missing sometime. And that when you only buy from the tax perspective, that's where actually disappointment comes.

But if you buy for the right reason, then you're going to stay in a game and you can really take a benefit. Because I personally believe in that you know real estate way more than I am.

But real estate is funny.

You know, the real estate is not like a stock market, right? You know, Apple stock, you can be in America, you can be in Africa, you can be in Asia. It is still the same price.
That's right.

Real estate, even you go 10 miles and it's a whole together different ballgame. Right.
So real estate is,

you know, that's actually very, very different than any other investment. So I personally believe there's always opportunity in real estate.
You need to just find it. You know, you need to work hard.

And sometimes people are lazy. they don't want to put in the efforts.
You know, you need to, I agree, you know, you need to, you know, really, really work hard.

It's, um, you know, this is one of my favorite subjects to the point I created this podcast because I want people to understand financial literacy. I want them to understand the things that you know.

Again, make sure you are reaching out to Neil. Um, before we end here, I want to know a little bit more about

what you would advise someone starting.

The new new entrepreneur, I'm going for it, Neil. I'm ready.
I'm hungry.

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So, I would say three, you know, main areas. So, one is,

you know, I'm not sure you know Chet Holmes, but

Chet Holmes passed away now. But he's to say anybody can make a good living by working half day, and half day meaning 12 hours.

Okay.

So, meaning number one is you need to work.

You need to put the hours. So, that's number one.
Number two is being best at what you do. You want to know more than anybody else.

I don't care if I know more than you about some sports or some other stuff, but whatever I do for a living, I need to know more than anybody else. So being best at what you do, I guess, right?

Third thing is also very, very important is your ethics.

You know, you don't want to compromise your ethics because end of the day, you know, that actually when you don't have a lot more money, you know, you think so money is the goal, but goal is not money.

You know, goal is to be happy. Yeah.
And the happiness comes when you you do it right way, right? Basically. So these are the three things

that I personally believe diligency always pays. So you can be the average person.
And if you're putting the efforts, you will, you know, outsmart the other smart people if they are lazy. Right.

So that other, so coming back, the hard work, being best at that time actually what you do, and you know, being ethical. That's been said on the financial side.
I would probably say,

you know, create the single member LLC initially you know you don't need to go crazy you know do that one once you start seeing the traction once you see the revenue once you're 100,000 plus then you can probably elect as the S-Corp

or so if you're buying the other real estate for other reason you can do that other many single single member LLCs and obviously your show has talked quite a bit and I'm sure your viewers knows about that one so I'm not going to go about you know jurisdiction and so on and so forth basically but yes you know those are things But I would probably say, don't worry about the money and taxes.

First, worry about creating a problem of tax, meaning creating a problem of real revenue. That's very hard.

That one,

you understand that

becoming successful in business, it's not easy. No, it takes a lot of work.
It is very easy.

And a lot of times you become an overnight success because you did all this work when no one saw you. And all of a sudden, you became successful enough that you had gotten notoriety.

And they're like, man, what an overnight success. And you're like, I've been eating shit for a decade.
Bingo. And it's not that easy.

The last one, I think this is a fun topic because everyone talks about it, but talk to us about the tax write-off of the cars.

What is the 176 or 179? Right down.

So like I just bought a new Range Rover, okay?

Exactly. So it's over 6,000 pounds.
But exactly, how does that write off? Because some people have the misconception. Again, let's just say

my payment is two grand.

Do I get to write off all two grand every single month? Or is it just the interest of the principal?

So, are you buying or you are leasing? I bought it. Right, right.
So, if you're buying, ideally, what you should do so that there,

you know, if it is for 100% business purpose, right, basically,

so you can take the next hundred percent write-off, basically.

No, that the entire entire value so that you bought it. Yeah, so it doesn't matter how you're paying, you're paying cash or you're financing.
Let's say the value of a car is $150,000.

You're taking rights off for the $150,000. Simple as that, because it is for business, basically.
So that's what it is.

Now that other people don't realize that if you're not utilizing for business, then there is an issue, basically.

And this is the gray area we talked about before. This is where the gray.
How do you prove it? How many miles? Where did you go? Like, now this is, I go around and round with my accountant.

It only matters if you get audited. Correct.
Correct. If you, so if you get caught.

If you're going to be pushing the lines like we were talking about off-camera, this thing over here might actually catch you.

It may not be the car thing, but this thing that you did over here, you didn't even think about

causes the red flag. The IRS says, hold on, so-and-so did this thing over here.

Meanwhile, you're trying to push the lines over here. They don't catch it.
But now they're going to go look at everything.

Exactly. In fact, if you look at that one,

you know, that that are the audit, you know,

statistics, one of the high audit area is people who make less than $140,000 and takes, you know, deduction on their Schedule C, which is, yeah, which is car or business travel, business mill,

$100,000 on Schedule C. Yeah, so you need to be very, very careful.
So that actually, this is what I would say.

Dabble is in a detail. Yeah.
Give the record. And that's where it gets harder.
So when you are small, you can keep the records.

But once you are making lots of money, you don't have a time to get the receipt

for the $200 dinner you had with your

prospect, basically. You don't, basically.
So that's where it gets harder. But when you're

actually starting out, I would keep the receipt of everything. I would probably take a quick picture.
You know, write it down. There's apps like Expensify.
Yeah, right.

You got to make it a little bit easier, right? Something. Yeah.
Something like that one. As long as you have the detail, that's going to help you basically.
But that is what I would say.

And that actually, we did talk

off camera. There are so many legal strategies available.

So, you know, you probably don't need to push to the gay area, you know, gray area, because if you can get it, you know, everything legally and ethically, why you need to go there.

You know, basically, you know, you can do

depreciation-based strategy. You can do some charitable-based strategy that are also extra-profile.
You know, once you have some money, basically.

So, as you're in my community of all the guests, and most of my guests are high income earners, what would be, and this is where we'll leave it, last question, what would be your top, your biggest tip

for the higher income earners making, let's just say, north of 500,000, most likely making it, what's the first thing you'd say, guys, you need to be looking at this if you aren't? So, so.

I would look at depreciation as the first.

You know, now that, as I mentioned, once you cross 626,000, so meaning if you're making $2 million, depreciation can only give you $626,000 if you are pure W-2 earners, basically.

If you are, if you're a business owner, you can get as much as you want.

So then you stack on top of that one is some

charitable

strategy. Charitable strategy is very, very powerful.
And that you feel good as well because

you have been fortunate. You know, God has given you something.
So by doing good, you are able to take some, you know, hefty deduction for yourself. So I would.
Charitable deduction.

So you write a check to

whatever charity. What's the right offer? No, that actually you can do so many other ways, so many creative ways.

So that actually charitable donation can be, say, for example, in a form of writing a check to charity directly, right? Number two could be donor advice fund.

Number three, you can create a trust, you know, crutch and crutch, or you can create your own foundation, right?

And the other one is you can also become part of some LLCs and you can get multiples of your money. You buy at the early stage, you buy at the lower price.

When you're actually donating, you are getting multiple of that one. It is very, very attractive.
So there's so many wonderful strategies.

I'm glad we ended with this is a perfect reason for me to say, go get a hold of this man right now.

There's just so many great strategies that like, because I come from real estate, it becomes always top of mind.

But for people who are are out there making money and even if you're about to make money understand

what you have in front of you and so Neil I really appreciate it make sure you follow Neil Jasani everywhere what website can they go to if you want to push them to a website they can go to neiljasani.com n-e-i-l-j-e-s-a-n-i.com I appreciate you brother if

this was helpful to you guys out there and you're like wow I didn't know that make sure you like this and make sure you share this episode with at least two of your friends we'll see you on the next episode.

You are the best, Justin. Thank you.
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